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In response to a congressional mandate to assess the reasons why the Department of Defense (DOD) is not fully in compliance with the Improper Payments Information Act of 2002 (IPIA) related to DOD travel expenditures, GAO issued two reports in 2007. In May 2007, we issued an initial report that provided an overview of DOD's IPIA reporting for fiscal years 2003 through 2006 and a discussion of the reasons reported by the DOD Office of Inspector General why the department was not in compliance with IPIA for fiscal year 2006. In December 2007, we issued our final report on our assessment of the completeness and accuracy of DOD's fiscal year 2006 IPIA disclosures related to travel expenditures, as well as DOD's planned efforts to improve and refine its processes for estimating and reporting on travel improper payments. The purpose of this letter is to bring to Congress's attention and action a matter that we discovered while preparing our final report. This letter is based on work performed during our assessment of the completeness and accuracy of DOD's fiscal year 2006 IPIA disclosures related to travel expenditures and DOD's planned efforts to improve and refine its processes for estimating and reporting on travel improper payments. That work was conducted in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Specifically, during our assessment, we found the postpayment review process used by DOD to prepare estimates of the amount of improper payments for travel processed through the Defense Travel System (DTS) (1) lacked documented sampling plans, (2) incorrectly categorized certain errors found in samples, and (3) used a methodology to estimate sampling results for nine DOD agencies that was not statistically valid. As noted in footnote 19 to our final report, DOD reported in its fiscal year 2006 performance and accountability report (PAR) that its random postpayment sample reviews were originally performed to satisfy the requirements of "certifying officers legislation." DOD did not identify the specific legislation referred to in the PAR, so we did not evaluate this assertion. However, our final report also noted that 31 U.S.C. 3521(b) authorizes heads of agencies to carry out a statistical sampling procedure, within certain parameters, to audit vouchers when the head of the agency determines that economies will result.

Recommendation for Executive Action

Status: Closed - Implemented

Comments: On March 3, 2008, GAO reported on concerns over whether the Defense Travel System (DTS) post payment sample reviews constituted a valid statistical sampling procedure under 31 U.S.C. 3521(b) to estimate improper payments. GAO recommended the DOD Inspector General determine whether DOD satisfied the requirements of the certifying officer?s legislation for valid statistical sampling procedures. In response, DOD agreed to establish and implement statistical sampling procedures to report a valid improper payment estimate for the population. In July 2009, GAO reported that the Defense Finance and Accounting Service had developed a statistically valid methodology to estimate its travel improper payments.

Recommendation: The Inspector General should determine whether DOD is satisfying the requirements of "certifying officers legislation."

Agency Affected: Department of Defense: Office of the Inspector General